Sunday, May 18, 2008

China rebuild trade spurs tremendous Friday gains in oil, energy, metals, materials

- Mixed session ends a constructive week, manages to hold gains, but not all questions answered
- Techs step up to leadership once more, but the China rebuild trade spurs tremendous Friday gains in oil, energy, metals, materials.
- Housing starts post a surprise gain as housing, other economic indications show firming . . . outside of sentiment
- $4/gallon gas just in time for Memorial Day
- Trying to add to the breakouts against what seem impossible odds.

Market sluggish after Thursday NASDAQ breakout, but it holds the gains as we wanted.

As questions surfaced daily (and on some financial stations, hourly) about how the SP500 was failing at 1400 yet again, we wrote about strong stocks continuing to set up and move higher on good volume, a good sign for the market overall. The indices were question marks after that last test of resistance in early May failed, but they did not roll over on rising trade. Threatened it Wednesday with some higher volume selling, but answered right back Thursday was a higher volume NASDAQ breakout over the 200 day SMA with SOX doing the same as the techs, large cap and not so large cap, rejoined leadership.

Friday the market did what we said it had to do after that NASDAQ breakout: hold the gains. Yes the indices closed mixed but all ended Friday bracketing the flat line. It was not all flowers and roses, however. SP500 and DJ30 moved up as well, but NYSE volume remained tepid overall and while SP500 knocked out the early May high, neither it nor DJ30 could move past the 200 day SMA. Financials remain an albatross around SP500's neck and they are not being all that kind to the Dow. The inability to clear the key 200 day SMA leaves a couple of question marks in the market even as NASDAQ, the mid-cap SP400, and SOX breakout.

China disaster trade spurs all things material.

Through history catastrophes or major events have often marked bottoms in markets. It is typically not THE event that makes the turn; the recovery has already sown its seeds and the event is the final straw that triggers action. The beginnings of economic recovery started in late 2002 and the market bottomed ahead of that, but the move that convinced most the bottom was truly in was the move just as the Iraq war began. The market faded after that October bottom and ahead of the war then shot higher with stocks breaking out of solid bases that formed AHEAD of the event, that is, in anticipation.

The tragic earthquake in China is having something of a similar impact. It is not the same type of event, but the ramifications for many sectors of markets across the world may be the same. We made mention of this the past week and in some of the alerts as to the impact on commodities, materials, engineering services and similar sectors that deal with massive construction projects. A huge area of China was impacted by the quake with over 300,000 major structures demolished and more heavily damaged. Dams are cracked and threatening rupture and you can bet that many bridges, roads, pipelines, etc. will need inspection and repair.

The impact is clear and impressively strong. Oil surged. Metals leapt higher again. Those have already been high. What about other areas that rallied in 2006 and part of last year but had slumped into exhaustion bases, e.g. engineering services and materials? Last week they took off. Cement hardened. Lumber grew tall and strong. Engineering services vectored sharply higher. All related to the basics of rebuilding, all up sharply.

The irony is, the higher oil and other necessary commodities rise, the more pressure on businesses and consumers, threatening the very demand the catastrophe created or enhanced. For now these areas are surging higher without showing a lot of fear of pricing themselves out of the demand curve.

TECHNICAL. Friday the market started decently, trying to continue the Thursday upside momentum even with surging oil prices (126.68, +2.56) right out of the box. The pullback started pretty quickly as we feared in the pre-market alert, and when Michigan sentiment came out at 59.5 versus the 62.0 expected, the selling picked up steam. As has been the case many times, midmorning was the fulcrum and the indices found bottom at 10:30CT; you can just about set your watch on it. A steady recovery to the close left the indices basically flat, half on the positive side, half on the negative. Decent recovery after blowing the early gains, basically a push for the session. That is, however, just what we said the market needed in the Thursday report following NASDAQ's breakout over the 200 day SMA, i.e. hang onto those gains.

INTERNALS: Really mushy as far as breadth with NYSE a little to the positive and NASDAQ a little to the negative. Volume was stronger on both NASDAQ and NYSE, moving further above average on NASDAQ as the techs struggled but managed to rebound 24 points off the session low; a bit of buying off the test lower. SP500 posted a modest gain on its rising though still below average volume (though the best trade since early in the month). You could call that a positive, but with the index below the 200 day SMA and going basically nowhere on the session, there was a bit of churn (high volume turnover) as investors played some hot potato. Ahead of the weekend you can understand that, but with the 200 day SMA and the trendline still there, it deserves as much attention as NASDAQ's higher volume break over the 200 day on Thursday.

CHARTS: As noted, SP500 could not move past its 200 day SMA. It moved closer to it but it did not even try to get through. NASDAQ solid below it intraday but it recovered. While the internals raised some caution indications, the indices did just what we needed, i.e. hanging onto the Thursday breaks higher. NASDAQ joined NASDAQ 100 and SP400 over that key level and it held it ahead of the weekend uncertainty. SP500 and DJ30 did not back down from that level. They still have to prove something next week, but they did what was needed during the week with the move higher and then they held it to close it out. Steps 1 and 2 completed.

LEADERSHIP: Little question as to where the leaders were Friday. The China rebuild trade sent materials, metals, energy (with an oil assist), construction services flying. With the money surging in their direction there was little left to spread elsewhere. That doesn't mean that was the only game in town; techs jumped back into the mix during the week along with transports and of all things retail. Indeed the transports exploded again Friday. Plenty of leadership in the market and money continues to move around, an ongoing healthy characteristic of this rally (needs it given the low NYSE volume!).


Housing starts rise in April as economic data again show the hint of a promise with the potential to someday mount a recovery.

We have talked about the firming in the economic data the past two months from the regional manufacturing reports to retail sales to lower inventories (thanks to higher sales). Jobs remain crappy, but they should as they are lagging and the economic data is just hinting at a recovery. Hinting indeed; thanks to the market recovering it is cluing you in to some of the economic firming.

We also discussed the housing market potentially bottoming for several months starting back with the housing stocks in January. Rising mortgage applications starting even back in February and March. Existing and new home sales showing upside surprises; not surges by any means, just better than expected, showing that same kind of firming. It helps that prices are dropping finally. Inventories are still high, but hey, it isn't a blastoff back upside, just signs of firming the same as with a lot of the other economic data.

The April housing starts announced Friday added some to the story (myth?) of the housing recovery as they rose an unexpected 8.2% to 1.032M when a decline to 940K was expected (954K prior). Permits rose as well, up 4.9% to 978K versus the 912K expected and March's 5% decline. While the market hardly needs more houses built right now as inventories remain in the 9.5 to 10 month range, there is someone acting as if he or she thinks there is some firmer footing right now.

What about the consumer? Michigan sentiment stinks.

May consumer sentiment missed expectations, falling to 59.5 versus 62.0 expected and 62.6 in April. You would say if the consumer misses then surly a recession is still to come as consumer spending makes up, as we all know from every stinking article you read about consumer sentiment, two-thirds of economic activity. Low sixties and into the fifties are definitely recession level numbers for sentiment.

So how can there be any firming if the consumer mindset continues to flag? What do we know about sentiment of all types whether consumer, corporate, investor? Take your pick: it is always lagging. CEO's, CFO's, CIO's (basically any 'O') is negative until things are very positive. Then they are very positive when things are topping out. Investors are negative at the bottom, giddy with delight at the top. The consumer tracks the same path because jobs mean so much and jobs are very much a lagging indicator.

Thus even though the consumer sentiment continues to slow that does not mean the economy cannot recover. Indeed it can mean that the economy is ripe to recover when all look upon the economic outlook and despair. Okay, that is more than a bit melodramatic (had to drag a quote in from 'Fellowship of the Ring'), but you get the point. When the consumer is very negative that usually occurs when things are overdone and ready to swing the other way.



Now that the Fed has entered the game with its credit facilities that actually work, the correlation with VIX that set up during the correction is broken. Volatility and hence VIX can decline and hold at low levels for a very long time and have no bearing on any continued rally.

VIX: 16.47; +0.17
VXN: 20; -0.13
VXO: 17.26; -0.11

Put/Call Ratio (CBOE): 0.85; +0.07

Bulls versus Bears:

This is a reading of the number of bullish investment advisors versus bearish advisors. The reason you look at this is that it gives you an idea of how bullish investors are. If they are too bullish then everyone is in the market and it is heading for a top: if everyone wants to be in the market then all the money is in and there is no more new cash to drive it higher. On the other side of the spectrum if there are a lot of bears then there is a lot of cash on the sideline, and as the market rallies it drags that cash in as the bears give in. That cash provides the market the fuel to move higher. If bears are low it is the same as a lot of bulls: everyone is in and the market doesn't have the cash to drive it higher.

Bulls: 46.0%. Continuing the rise, up from 44.4%, slowing a bit as the week prior they jumped from 40.9%. The rally is having its impact, pushing bulls higher, up from 39.1% and 37.8% where it held for a few weeks. Fell to 30.9% in mid-March as the low. The indicator did its job with the dive below 35% and the crossover with the bears. The bulls and bears were eye to eye in mid-February and have crossed. A move into the lower 40's is a decline of significance. A move to 35% is a bullish indicator. This is smashing that. For reference it bottomed in the summer 2006, the last major round of selling ahead of this 2007 top, near 36%, and 35% is considered bullish.

Bears: 29.9%. After rising the prior week the bears turned south, falling from 32.3%. As with the bulls the jump in bears did its job after hitting 44.7% in the third week of March that was up from an already freakishly strong 43.3% the week before. That was a surge from an already high 36.6% the prior week. Up sharply from a low of 19.6% on the last rally. It is over 30% and indeed over 35% the prior week, meaning it has blown past the range that means business. Big move after falling to a low of 19.6% on this round. Bearishness peaked at 37.4% in September 2007. It topped the June 2006 peak (36%) on that run. That June peak eclipsed the March 2006 high (33%) and well above the 2005 highs that spawned new rallies (30% in May 2005, 29.2% in October 2005). This is a huge turn, unlike any seen in recent history.


Stats: -4.88 points (-0.19%) to close at 2528.85
Volume: 2.273B (+3%). Volume was up again, still above average for the third straight session. Though on a loss note that NASDAQ rebounded 24 points off the low; there were some buyers coming in to push it back up after that early selloff.

Up Volume: 1.136B (-660.055M)
Down Volume: 1.107B (+674.459M). Dead heat even though NASDAQ closed lower for the session.

A/D and Hi/Lo: Decliners led 1.34 to 1
Previous Session: Advancers led 1.57 to 1

New Highs: 78 (+4)
New Lows: 96 (+24)


Gapped higher at the open, gave up the 200 day SMA (2516) but held support at 2500 and that sent it back up to just miss a positive close. Volume was up and that can be read two ways: some churn as NASDAQ could not move higher or some buying as it dipped early then recovered into the close. Looking at it as the latter. Good break over the 200 day SMA on solid volume, then a test, hold and recovery Friday.

NASDAQ 100 (flat) sold off as well but then recovered to close flat. Good week for the large cap techs as they stepped back into leadership with a rally off the test of the 200 day SMA after it broke over that level to start the month. Very solid uptrend is in place.

SOX (+0.46%) cleared the 200 day SMA Thursday as well, tested Friday, and then moved higher on the close. Great week for the chips as the recovery continues.


Stats: +1.78 points (+0.13%) to close at 1425.35
NYSE Volume: 1.315B (+10.06%). Volume was up to the best level in two weeks as the NYSE indices tested the 200 day SMA further. Some churning here, but we not they reached lower as well and recovered, suggesting a modicum of buying on the pullback.

Up Volume: 614.21M (-318.102M)
Down Volume: 663.743M (+420.417M)

A/D and Hi/Lo: Advancers led 1.12 to 1
Previous Session: Advancers led 2.41 to 1

New Highs: 174 (+80)
New Lows: 65 (+38)


SP500 edged closer to the 200 day SMA (1428) but did not challenge it. Intraday it tested lower but easily held above the 10 day EMA and the 1400 level. It also managed to close over the early May interim peak, a good indication even as it struggles with the 200 day. Did what it had to do to end the week, i.e. holding the gains after bouncing off the 18 day EMA and putting in a nice week.

SP600 (-0.12%) cleared the 200 day SMA intraday but could not hold it. Bounced off the 10 day EMA intraday with that selling into midmorning, recovering to close just below that key level. Sure would be nice to see the economically sensitive small caps make the breakout over the 200 day to join SP400 mid-caps in their run higher. That would be a tremendous shot in the arm to the market.

SP600 Chart:



Bumping up against the 200 day SMA once again (13,015) on rising, almost average volume. As with the other indices, the Dow tested lower intraday, holding the 10 day EMA and rebounding into the close for a flat day. Unlike the other indices, the blue chips have not made a higher high yet as they are still below the descending 200 day SMA. Kind of ironic given the Dow led the market off of the March lows. That is part of the rotation taking place in the market. The Dow got things started, and as it rallied the other indices and stocks worked on their bases, getting ready to move.

Stats: -5.86 points (-0.05%) to close at 12986.8
Volume: 249M shares Friday versus 217M shares Thursday. As with SP500, some churn or high volume turnover just below the key 200 day SMA. Did make a higher low, however, and after a pause we will see if the Dow can make the break over the 200 day on some more of the good volume.



The market did what we wanted, making it out of the week holding its gains. That the Dow and SP500 didn't even make it over the 200 day SMA means little; it wouldn't have meant much if they did unless they powered on through it.

That leaves the market still looking for a break through resistance by SP500 and DJ30 and for NASDAQ to continue holding its move over the 200 day. Despite all of the bad news relating to surging oil, continuing worries about credit and housing issues, and more talk about inflation (at least by the FOMC), stocks are performing decently overall and exceedingly well in the right sectors and in the right stocks in other sectors. Our plays are for the most part either flying or are in steady upside trends. Nice thing is, the remaining ones are mostly ready to make the break higher as well.

It could all be a bear market rally that will ultimately fail, but the firming economic data is quietly suggesting the market is not full of beans, at least not all of it. NYSE remains the enigma with its chronic low volume on the rally. That is typically a bad omen, but with so many sectors moving higher on good volume and many of them economically sensitive, it doesn't pay to ignore the action and fail take advantage of the good moves. That is why we have been so active.

We will continue to do the same this week if the market presents the opportunity. With SP500 and DJ30 testing the 200 day SMA from down below that will be a main focus along with how NASDAQ holds its 200 day SMA. Stocks such as AAPL and RIMM likely need a bit more testing before they try another move higher, but as we have seen, other stocks keep stepping up in new bases, e.g. the materials stocks last week. Once again, as if I didn't say that enough last week, that shows money rotating through the market, not leaving, and that is very healthy action.

The dollar will need to pick back up; after a healthy consolidation the past two weeks it broke hard lower Friday as gold surged higher, moving back over $900 with a $20+ move. It was close to $800 just a week back. Part of that commodities surge last week, but with the dollar lower that raises a caution flag. Thus far the market has held well in spite of oil, but the dollar was helping. Need to see it step it up again in the coming week as we look for new buys if SP500 and DJ30 can follow the other indices with the breakout over the 200 day SMA.

Support and Resistance

NASDAQ: Closed at 2528.85
2540 from November 2007 low
2576 represents a range of interim peaks and troughs from May 2007 into December 2007. At least 8 in that period.
2615 is an old trendline from summer 2004/summer 2005
2618 from a June 2207 peak. As it is coincident with the above trendline it grows in significance.
2668 to 2673 from November/December 2007 interim peaks
2720 (July 2007 peak), 2724 (December 2007 peak) are key resistance points

The 200 day SMA at 2517
2500 from interim August lows.
The 10 day EMA at 2488
2451 is the August closing low
The 18 day EMA at 2460
2419 is the January 2008 peak and the early February peak
The 50 day EMA at 2404
2392 is the April 2008 peak
2386 is the August intraday low
2378 is the mid-February peak; 2379 from the October 2006 peak
2370 from the April 2006 peak
The 90 day SMA at 2351
2340 from the March 2007 low
2305 is the trendline from the summer 2004/July 2006 lows, Q4 2005 consolidation

S&P 500: Closed at 1425.35
The 200 day SMA at 1428
1429 is a longer term trendline from the August 2003/September 2004 lows
1433 from a pair of August 2007 lows and December mid-month intraday low
1446 from the December low
1460 is the February 2007 peak
1481 represents several peaks and lows ranging from April 2007

1406 is the August and November 2007 closing low
The 10 day EMA at 1408
The 18 day EMA at 1400
1396 is the February 2008 peak
1387 is the April 2008 intraday high
The 50 day EMA at 1380
1370 is the August 2007 intraday low
1374 is the March 2007 closing low
The 90 day SMA at 1359
1338 is an ancient trendline

Dow: Closed at 12,986.80
The 200 day SMA at 13,015
13,092 is the December 2007 intraday low
13,133 is the May 2008 high
13,250 from price points in second half of 2007
13,563 is the late December peak
13,780 is the early December 2007 peak

12,845 is the August closing low
The 18 day EMA at 12,858
12,786 is the February 2007 peak
12,750 to 12,768 is the February 2008 peak and a series of lows and highs from August 2007
12,743 is the November low
The 50 day EMA at 12,702
12,573 is the mid-February high
12,518 is the August intraday low
The 90 day SMA at 12,497
12,250 from late March 2007 lows
12,070 from the early February 2008 lows
12,050 from the March 2007
11,731 is the March 2008 low
11,670 is the May 2006 intraday high; 11,642 closing
11,634 is the January intraday low

Economic Calendar

These are consensus expectations. Our expectations will vary and are discussed in the 'Economy' section.

May 19
Leading Economic Indicators, April (10:00): 0.0% expected, 0.1% prior

May 20
PPI, April (8:30): 0.4% expected, 1.1% prior
Core PPI, April (8:30): 0.2% expected, versus 0.2% prior

May 21
Crude oil inventories (10:30): 176K prior
FOMC Minutes, April 30 (2:00)

May 22
Initial jobless claims (8:30): 371K prior

May 23
Existing home sales, April (10:00): 4.85M expected, 4.93M prior

By: Jon Johnson, Editor

Jon Johnson is the Editor of The Daily at

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Monday, May 05, 2008

Commodities Continue Their Recovery

- Jobs report, additional Fed action rev up stocks, but the stronger start doesn't last.
- Stock market still looking for some power in its move higher.
- Commodities continue their recovery despite that rising dollar.
- Jobs report provides encouragement, and economic data improved, but with energy and food prices surging, can robins be on the economy's yard.
- Watching the commodities, tech, financials, and transportation as indicators of the rally's health.

Stocks sprint out of the gate, but it was Friday, and that was used to sell.

The jobs report was better than expected with a 20K loss (-75K expected) and a lower unemployment rate (5.0%, 5.2% expected) was a nice bonus. The Fed was active as well, showing it meant what it said about using its facilities to continue adding liquidity as needed. It increased its auction amount to $150B from the $100B it bumped it to in March, it included triple A asset back securities as acceptable collateral, it jumped its ECB swap volume to $50B from $20B, and it doubled the swap amount with Switzerland to $12B.

The combination had futures bouncing, the dollar running, and bond yields rising. Basically the same action seen in the several markets of late as the understanding of the Fed's liquidity steps grows. Of course, after a good move Thursday, a strong open on a Friday begged some sellers to come in, and indeed the stock market was already peeling back in the first hour. First half-hour for that matter.

A better than expected factory orders report (1.4% versus 0.2%) reinvigorated stocks with a caffeine injection and they rallied higher, moving to new session highs after that quick pullback. The caffeine high did not last long; less than an hour into the session stocks were turning over again.

We used the move higher to take some gain off the table. We were not buying on the move. As noted in Thursdays report, it was Friday after a pretty good week, and that left the market vulnerable to some profit taking. We noted that any decent jobs report would be a head fake as we know that report lags other economic data, and despite some modest improvement in some reports (e.g. the ISM, factory orders) it would be a head fake as we know jobs lag all other economic data and the other data has not indicated any economic bottom.

The surprise on the day was the strength in commodities. They rallied back sharply Thursday afternoon post-FOMC even as the dollar ran higher. Same on Friday: dollar up, so were commodities. Is it a situation where there is such demand that a rising dollar won't blunt the commodity advance? Could be. We will know more about that this coming week when the end of month/beginning of month trade is over and things 'settle down' into a more normal routine.

TECHNICAL. Well, it was the old high/low routine: high at the start, lower at the close. A little too much excitement that we lost 20K jobs, and when you factor in that the numbers likely don't reflect reality, it didn't take too long for the early surge to start to purge. Within in an hour as it turned out. Not great action, but when you see futures that strong on data that conflicts with reality, you typically get this response.

INTERNALS: Modest. That is about it: modest. Breadth was slightly positive on NYSE (1.3:1), slightly negative on NASDAQ (-1.3:1). Volume faded on both exchanges, remaining below average on NYSE while remaining above average on NASDAQ. Now NYSE volume never did break above average on this move other than back in mid-March when it was putting together the bottom. That means it hasn't been there through a month and one-half of gains. Not the best price/volume action though volume was mostly up on upside sessions and lower on downside sessions, which is what you want to see. As discussed Thursday, however, you want to see some power in the moves and that means volume. Below average volume means that not everyone is participating, and if things turn it doesn't take much for the sellers to send a rally packing. As SP500 is heavy into financials and investors remain pensive about them, even though they are rallying there is not much support.

On the other hand, NASDAQ is showing above average trade on key sessions, i.e. when it breaks higher. That shows significant accumulation and the market needs growth stocks to grow in price if it is going to continue rallying. Financials are also key and they have low volume; definitely a tension here as the market really needs financials to be successful. NASDAQ's increased trade is very good. It needs to spill over into the financials, however, for a rally to be really successful.

CHARTS: Great moves . . . intraday. DJ30 cleared the 200 day SMA, its next resistance, but gave it up on the close. NASDAQ gapped to next resistance at 2500, and that was the high for the day. SP500 hit its longer term trendline and faded back as well. Great starts, mediocre finishes. Good breakouts Thursday, particularly on NASDAQ with its volume, then an unfulfilled promise at the close. They likely have a bit more upside to put in despite the Friday reversal before they rest again given the breakout was just on Thursday. Not a lot of upside, but a bit more.

LEADERSHIP: The Thursday leadership surged but then purged, though not a total reversal as stocks such as RIMM held their gains. Overall there was a definite industrial and commodities bias as the latter continued their bounce back from some harsh selling. Some were quite successful with their bounces and held their trends. Others look as if they are simply in a relief bounce after breaking their trends. Still looks as if tech is in good shape after maybe taking a breather here. Transports remain in excellent shape, and even retail continues to improve. The financials are still moving up; if they had volume they would be serious contenders for new leaders of the new year.

In sum, the market is still looking for power. NASDAQ is showing some strength though not clear power. NYSE is simply not showing power. Financials are the clear example: rising but no volume. If they get power then this rally will be a clearer indication of real market strength and thus a better indication of a rising economy not too far down the road. The light volume for NYSE and the financials makes the move suspect in the longer run, but for now the rally is working.


Economic data shows nascent signs of bottoming. Good but don't light up just yet.

Jobs were better than expected though still negative. Factory orders for March were definitely much better than expectations at 1.4% versus the 0.2% expected and the -0.9% in February. That February number was revised higher from -1.3%; revisions are where the truth lies because it is like having more than just one good data point. Definite improvement there. The ISM as not as bad as expected either but it was still below 50.

Maybe all of this is telling us the economic dip is bottoming. If that is the case that is truly amazing given the housing bubble popping and the credit freeze from last summer. Yes the Fed has found what appears to be the magic potion and even strengthened the dosage on Friday. With a financial crisis restoring confidence is typically all it takes to get things greased and back to normal. If too much time passes, however, and damage is done as a result of the freeze up, then it can take more than just a Fed appearing in command of the situation. This recovery, or more accurately, attempted bottoming, is suggesting there was not a lot of structural damage.

Okay, maybe not. Maybe the Fed's actions were enough to sooth the savage beast of the financial markets AND soften the blow of housing burning down. What about gasoline heading to $4+/gallon this summer and food costs jumping, despite the President's protests otherwise, in large part because of added demand created by a social planning mandate courtesy of a philosophically confused administration (is it a free-market president or just a free-market until some emotional issues comes up president?), can any attempted economic bottom hold?

Food and energy (now referred to as Foodergy because their prices are now joined at the hip) are taking a larger and larger share of disposable income. It is thus no longer disposable income but monthly overhead: you have to eat and drive to work (remember, jobs are improving, right?) and it is taking more scratch to do it. Thus less for the other things in life that make our standard of living nice. We are not going to get wealthier as a nation spending our money on fuel and food, the former going to fund the anti-American activities of those selling us the fuel. This higher and higher cost of living is only going to drag the economy more just as some of the numbers are showing signs of bottoming.

The questions about the impact of surging fuel and food prices on an already weak economy remains. A look to the market shows an improvement and thus something of a confirmation of the attempts at bottoming in the economic numbers (actually it is the other way around: market bottoms, then the data improves, just as it is trying to do here).

So, bear market rally or a new bull market starting out of a very, very modest correction? As I said before, the correction sure seems too little to account for the mortgage and credit issues, and now you add surging energy and food costs on top. Robins on the yard indicating springtime for the economy and thus a new bull market? It is enough to leave you nervous and cautious about the prospects, but with growth stocks showing solid patterns and runs higher with tech gaining more strength you have to go with the market moves. You don't only play straight up bull market runs. You can play bear market rallies as well. You just have to keep alert and assume that, given the weak data and lack of NYSE volume on the rally, it is like a bear market rally. It could be very much the opposite, but if it is, it will just keep telling up to buy in and thus we miss out on nothing.

By: Jon Johnson, Editor

Jon Johnson is the Editor of The Daily at

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